Potbelly Corp. shares more than doubled in their debut as investors rushed to grab a piece of the sandwich maker whose low-priced menus have appealed to consumers in a tough economy.
The company, which counts Starbucks Corp. Chief Executive Howard Schultz as its largest investor, is the second restaurant chain to go public this year after Noodles & Co.
Potbelly's shares opened at $28.66 and touched a high of $33.44 in early trading, valuing the company at about $936 million. The IPO was priced at $14 per share, above expectations.
Restaurant chains such as Potbelly and Noodles are attracting diners by using higher quality ingredients than fast-food chains and offering meals at lower prices than casual dining chains such as Darden Restaurants Inc.'s Olive Garden.
Investors have also taken a liking to these chains, often categorized as "fast-casual." Noodles shares doubled in their debut in June and are up 34 percent so far.
"The overall trend is to go for speed and money," said Harry Balzer, chief industry analyst of market research firm NPD Group Inc.
Sales at fast-casual eateries jumped 13.2 percent in 2012, more than double the pace at which fast-food chains increased their sales, according to consulting firm Technomic. Casual dining sales rose just 2 percent during the period.
Potbelly's sales were brisk in 2012, with revenue rising more than 15 percent to $274.9 million and profit tripling to $24 million. The company has posted positive same-store sales growth in 12 of the last 13 quarters.
Potbelly started in 1977 as a food counter in a small antique store in Chicago.
Potbelly's 295 outlets are mostly concentrated in the Midwest, although it is also a popular fast meal in Washington D.C., where it has a cluster of outlets within a few blocks of the White House.
"It is gaining a lot of interest in areas outside the Midwest where it seems to be focused currently, and expansion potential seems to be reminiscent of popular food chains that are going to succeed in markets," said David Menlow, president of IPOFinancial.com.
The company is headed by Aylwin Lewis, whose resume includes titles such as chief executive of Sears Holdings Corp. and chief operating officer of Yum Brands. He is also on the board of Walt Disney Co. and Starwoods Hotels & Resorts Worldwide Inc.
Starbucks' Schultz owns 20 percent of the company through his venture capital firm Maveron Equity Partners.
Other casual dining chains readying to go public include Mediterranean style restaurant chain Zoe's Kitchen and hamburger chain Checkers Drive-In Restaurants Inc.
BofA Merrill Lynch and Goldman Sachs are the lead underwriters to the offering. Robert Baird & Co., William Blair and Piper Jaffray are also among the underwriters.
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